Level 3 pays $3bn for Global Crossing

Tier 1 rival was worth $39bn back in the day

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Level 3 is acquiring fellow tier 1 network provider Global Crossing, bringing together two of the most notorious fibre-networking firms from the heyday of the dotcom boom.

Level 3 will take over Global Crossing in an all-share deal, handing over 16 of its shares for every one of Global Crossing's. Working from Level 3's stock price on Friday, that values each share of Global Crossing at $23.04, taking into account $1.1bn of debt.

The firms say the deal will create a company with a "unique capability to meet local, national and global customer requirements in a wide range of markets". Naturally, the firms say they are complementary.

As a result of the deal, Singapore Technologies Telemedia, Global Crossing's biggest shareholder, will become a significant investor in Level 3. Level 3 said the deal will begin delivering free cash flow from 2013.

While both firms are barely on the radar to most net users these days, Global Crossing in particular was a fully paid up member of the dotcom boom, from the investors' point of view anyway, blowing through billions as it raced to build out its network around the turn of the century.

In its pomp, it was valued at as much as $39bn. But it collapsed into Chapter 11 in 2002, with government probes coming at it from all angles.

In April 2002, it wrote down $8bn in goodwill for just the fourth quarter of 2001, warning that billions more would probably be written off at some point.

It was eventually bought out by Hutchison and Singapore Telemedia, with the previous shareholders wiped out. By that point, it was valued at around $407m.

Not that Level 3 has had it all its own way over the years. Its shares were around the $140 mark in 2000. Its closing price on Friday was $14.80. ®